Avoiding Attrition: How Leading SMBs Retain Talent as They Grow

Michael C. Bush

17 October 2017

Employees are drawn to small businesses for their friendly colleagues, entrepreneurial leaders and the chance to bring new ideas into the world. Once a business starts to grow, though, attrition can become an unexpected side effect of success.

“The way you make decisions and communicate with 100 people won’t necessarily work with 1,000," said Marcus Erb, vice president at Great Place to Work. "It becomes much easier for leaders to lose touch with the experience of employees, and they’ll leave if you don’t safeguard the culture that first brought them into your company.” He also noted that the knowledge and experience people gain at a growing SMB make them attractive recruitment targets for larger competitors.

As Great Place to Work conducted the research behind the 2017 Best Small & Medium Workplaces, we gained insight into how the leading employers retain their talent as they expand.

Build Culture from Day One

Across hundreds of companies we’ve surveyed, employees’ scores tend to decline as the business becomes larger. That suggests small companies will never be in a better position to create an inspiring organization that people love.

For example, team members at the Best Small & Medium Workplaces scored them 20 to 25 percent higher than comparable employers on questions linked to innovation. Businesses we've studied in the top quartile for innovative behaviors reported 23 percent median revenue growth – 3 times faster than their peers.

It's also important to recognize that colleagues at SMBs often feel differently about their employers than those in larger enterprises. At companies with fewer than 100 team members, we found:

Only 1.5 percent of employees planned to stay long-term when they didn’t agree that they have a great place to work. By contrast, people at larger organizations were more likely to stick around, even if they didn’t admire their workplace.

Employees were 27x more likely to plan a long-term future at small businesses they described as friendly. Caring co-workers were an even bigger driver of retention at SMBs than at large companies.

Small business employees who said they’re proud to tell others where they work were 31x more likely to stay long-term.

An employee at Best Workplace Salsify testified to the advantage a collegial culture can offer a smaller organization: “Everyone is so easy to talk to. The company has become a community of vibrant, interesting people that gets better as the company grows.”

Hire With Intent

Leadership is the key to keeping a positive work environment intact as companies scale, said Erb. “There can be a lot of management roles to fill quickly, and it’s tempting to hire for skills over culture.”

Instead, every hiring decision should be guided by the company’s values. For leadership roles, it’s critical to confirm new executives demonstrate integrity and show genuine concern about the people they oversee. It’s also important that employees can trust their leaders will make advancement decisions in an even-handed fashion.

As companies grow larger, survey scores surrounding office politics and the fairness of promotions are among the most likely to drop. An unequal career experience isn't just bad for morale: Our research has found that workplaces admired by all employees – regardless of personal background or position – enjoy much faster revenue growth.

At the Best Small & Medium Workplaces, the trustworthy culture that helped establish their success serves as an important guide as they become more complex. Said one employee at Pluralsight, “I have never been a part of a company where our mission and values are talked about so often, known among the company, and people believe and practice them both professionally and personally. It's truly inspiring.”

Michael C. Bush

Michael Bush is CEO of Great Place to Work for All® which is the global analytical authority on high-trust, high-performance workplace cultures. GPTWFA provides analytics to 10,000 organizations in over 57 countries. It also produces a number of annual “Best Workplaces” lists including the popular FORTUNE 100 Best Companies to Work For® list. Prior to GPTW, Bush was the CEO of Tetra Tech Communications, a billion dollar global telecommunications infrastructure firm. Bush was also a member of President Obama’s White House Business Council. He earned his M.S. in Management from Stanford’s Graduate School of Business.